KGI Asia Commentary

Hang Seng Index rose 122 points on Friday

Hang Seng Index opened 48 points higher on Friday, at 22,614 points, and extended their gains throughout the day to 22,689 points by 122 points. The China Enterprises Index rose 67 points to 7,773 points; the Hang Seng Technology Index rose 50 points to 4,813 points. Market turnover was HK$97.2 bn. Movie and Entertainment stocks were mixed performance. Huanxi Media (1003) fell 6.9%, but IMAX China (1970) rose 2.7%. Foreign media reported that China might consider imposing export restrictions on solar energy technology. Photovoltaic stocks fell. Xinyi Solar (968) fell nearly 3%, and GCL Technology (3800) fell 2.2%.

U.S. PCE data continues to fall in December

The United States announced that the personal consumption expenditures price index (PCE) in December rose 5% year-on-year, down 0.5 percentage points from the previous month, and the core PCE rose 4.4% year-on-year, down 0.3 percentage points from the previous month. The PCE data continues to fall, which will help strengthen expectations that the Federal Reserve will continued to slow down the pace of interest rate hikes. The market will continue to focus on the US stock earnings.

After the release of the data, US Treasury Secretary Janet Yellen said that US inflation and employment data are encouraging, but high interest rates still pose a risk of recession in the US. In addition, the results of the US interest rate meeting will be announced in the early hours in the coming Thursday in Hong Kong time. Prior to this, interest rate futures expected a 98.4% chance of raising interest rates by 25 basis points in February.

The three major U.S. stock indexes all performed well on Friday. The Nasdaq rose 109 points or 0.95% to 11,621, the S&P 500 rose 10 points or 0.25% to 4,070, and the Dow Jones rose at least 29 points or 0.08 %, at 33,978 points.

A number of data announcements after the Chinese New Year Holiday

The Chinese New Year holiday is over, and data on domestic consumption and citizens’ travel are being released. The National Immigration Administration announced that from January 21 to 26, the number of people crossing the border reached 2.39 mn, a sharp increase of 123.9% over the same period last year. Among them, the number of outbound passengers reached 1.192 mn, an increase of 120.7%. In addition, from February 6, the Ministry of Culture and Tourism will resume national travel agencies and online tourism to operate Chinese citizens' outbound group tours and "airline + Hotel" business in specific countries. The tourism industry will gradually recover.

In terms of consumption, the sales revenue of consumption-related industries increased by 12.2% year-on-year, which is 12.4% higher than that of the CNY in 2019. It can be seen that the public's desire to spend during the CNY has increased significantly. Regionally, the sales revenue in Anhui, Jiangxi, Henan, Guangxi and other regions increased by 10% to 20% due to the return of the working population to their hometowns.

Southbound trading of Hong Kong Stock Connect will resume today.